Sebi panel for overhaul of conflict of interest framework: How will it improve transparency?, Pg25

Key Highlights:

• SEBI's High-Level Committee (HLC) proposed reforms to strengthen the conflict of interest and disclosure framework for its board members and senior employees.
• The recommendations include a multi-tier disclosure regime, requiring public disclosure of assets and liabilities by the chairman, whole-time members, and senior SEBI employees.
• The committee suggested uniform investment restrictions for the chairman and whole-time members, aligning them with SEBI employee regulations.
• A robust whistleblower system has been proposed to protect investor interests and ensure the orderly functioning of the securities market.

Detailed Insights:

• The expert committee was formed in March 2025 after allegations of conflict of interest against the former SEBI chief.
• The current framework was deemed inadequate, necessitating reforms to enhance transparency, accountability, and ethical standards.
• The proposed reforms aim to align SEBI with global best practices, strengthening its independence and integrity as the capital market regulator.
• Applicants for chairman and WTM positions must disclose potential conflict-of-interest risks to the appointing authority.
• The chairman and WTMs will be included in the definition of 'insider' under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
• Part-time members are exempt from investment restrictions but must make necessary disclosures regarding unpublished price-sensitive information (UPSI).

Key Concepts Involved:

• Conflict of Interest: A situation where an individual's personal interests could potentially compromise their professional duties.
• Insider Trading: Trading of a public company's stock by individuals with access to non-public, material information about the company.
• Whistleblower: A person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization.